SOLUTION: BUSINESS MANAGEMENT, MAY 2014

SOLUTION 1
(a) The structure of an organization defines the patterns of communication, the system of
control and the command structure.
(b) Factors to consider when deciding on the appropriate structure for an organization
include the following:
(i)

Size
The size of an organization will determine the structure to adopt. A large organization
is more likely to be specialized to favour a bureaucracy or traditional hierarchical
structure whereas a small organization will prefer a centralized one.

(ii)

Chosen Strategy
A company pursuing growth strategy will probably adopt a different organization
structure from one which is pursuing a non-growth, low risk strategy. It must be able
to move quickly, so the organization structure must allow quick decisions. This
means that chains of command should not be long.

(iii)

Extent of Geographical Separation / Dispersion

The greater the geographical distance from the head office, the greater the necessity
for decentralized control and vice versa.

(iv)

Technology
The level of technology adopted by the organization will influence the structure of the
organization. A high technology firm will adopt a more decentralized structure to
facilitate quick decisions. An organization that uses less technology on the other hand
is more likely to adopt a centralized structure.

(v)

Environment
A firm operating in a dynamic environment needs a relatively flexible structure,
whilst the firm operating in a stable environment will need a more rigid structure and
firms operating in an intermediate environment need a structure somewhat between
the two extremes.

(vi)

Extent of diversification
A more diversified firm is more likely to adopt a decentralized structure whereas a
non-diversified organization is more likely to adopt a centralized traditional structure.

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SOLUTION: BUSINESS MANAGEMENT, MAY 2014

SOLUTION 2
(a) Primary Stakeholders
(i)
These are the key people involved in the managing of a business. They are central
to all business activities as they are mostly affected by what the organization does.
These are mostly internal stakeholders of the business. Examples of primary
stakeholders are shareholders, creditors, customers and employees.
(ii)

Secondary Stakeholders
Secondary stakeholders are also involved with the activities of the business.
Secondary stakeholders are external stakeholders. They are not directly involved
with the management of the business but are greatly affected by the decisions and
activities of the business. Examples of secondary stakeholders of a business are
the general public, societies, business support groups, government agencies and
so on.

(b) Decision making activities

(i)
One of the steps or activities in decision making is for the manager to define the
issue that needs to be addressed. A problem exists when there is a gap between
what is expected and the actual happening.
(ii)

Another activity is for the decision maker to spell out the decision criteria that are
vital for dealing with or solving the gap identified. In this activity the decision
maker has to come out with what is relevant in making the decision.

(iii)

Another activity is for the decision maker to identify alternatives for solving the
problem. Most times the decision maker has to select from a lot of feasible
alternatives. It is recommended that some research is carried out to enable the
decision maker come up with good alternatives.

(iv)

Once the alternatives have been identified it is necessary for the decision maker to
analyze the various alternatives. A tool that can be used to come up with a good
alternative is the SWOT analysis.

(v)

After analyzing the alternatives to come up with their advantages and

disadvantages, the decision maker has to evaluate the alternatives. Alternatives
that are ranked high are more preferable to those with low values.

(vi)

Another activity that has to be undertaken by the decision maker is for him or her
to implement the alternative that has been selected. A decision has no value until
it is implemented. Once the alternative selected is implemented it is vital that
follow ups are undertaken.
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SOLUTION: BUSINESS MANAGEMENT, MAY 2014

SOLUTION 3
(a) Communication can be defined as an act by which one person gives to, or receives from
another person information about that persons needs, desires or opinions. It can also be
defined as a two-way process by which two parties create and share understanding. It is a
two-way process because the original sender of the message becomes the receiver when
he gets a feedback.
(b) Factors to consider before choosing a medium of communication include the following:
(i)

An important factor to consider in choosing a medium of communication is the

urgency attached to the message to be communicated. A person who desires to
transmit an urgent message may choose verbal communication.

(ii)

If there is the need for a permanent record of the communication, then written
communication will be suitable rather than non-written communication.

(iii)

The medium of communication used should enable the communicator to

accurately transmit whatever he intends to share with the other party and at the
same time make it possible for the receiver to make the right meaning out of it.

(iv)

The state of mind of the intended recipient of the message must be taken into
account prior to choosing a medium of communication.

(v)

Another factor to consider is the cost involved in an attempt to communicate

effectively. In choosing a medium of communication, the communicator will want
to choose one that is most cost-effective.

SOLUTION 4
(a) Quality refers to the specification or standards set in the design of product/services and
the degree of excellence specified.
OR
Quality has been defined as a totality of features and characteristics of a product that
bears on the ability to satisfy stated or implied needs (ISO 8402), whereas total quality
management is a philosophy that stresses three principles for achieving high levels of
process performance and quality. These principles are customer satisfaction, employee
involvement and continuous improvement in performance.
OR
TQM is a management philosophy that emphasizes managing the entire organization so
that it excels in all dimensions of products and services that are important to the
customer.
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SOLUTION: BUSINESS MANAGEMENT, MAY 2014

(b) (i) Fixed position layout is the arrangement where the manufacturing or service site is
fixed in a place and employees come to the site with their tools to work. This type of
layout makes sense where the product is difficult to move as in shipbuilding.
(ii) Product layout is the type of layout where manufacturing equipment is arranged in the
same sequence a s the operation performed on the production floor. This type of
arrangement allows for continuous flow of production.

(c) Advantages of product layout include the following:

(i)

Raw materials, work in progress, finished parts and warehouse stock are reduced,
leading to lower production costs and efficiency.

(ii)

Material handling is reduced as work is moved over short distances to the next stage
of operation.

(iii)

Due to increased mechanization and the possibility of breaking work into simple
tasks, low-skilled workers can be employed and this results in lower labour costs and
less difficulty in training labour,

(iv)

Another advantage is reduced manufacturing area. Provided that machine utilization

is good, less floor space is required for a given output. This is gained by a more
compact arrangement of equipment, the possibility of improved machine utilization
and greatly reduced store area.

SOLUTION 5
(a) A matrix organization structure is one in which each employee reports to both a
functional or divisional manager and a project or group manager. Employees have two
bosses that is they work in two chains of command. One chain of command is functional
and the other is a horizontal overlay that combines people team led by a project manager
who is an expert in the teams assigned task.
(b) (i) The matrix structure gives an organization a great deal of cost-saving flexibility.
Because each project is assigned only the number of people it needs, unnecessary
duplication is avoided.
(ii) By working together as a team, people come to appreciate the demands faced by those
who have different areas of responsibility.
(iii) It is an efficient means of bringing together the diverse specialized skills required to
solve a complex problem. Problems of co-ordination are minimized because skilled
personnel for a project work as a team.
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SOLUTION: BUSINESS MANAGEMENT, MAY 2014

(iv) Employees used in the matrix structure to undertake a project have the ease to move
back into the functional organization once the project is completed.

(c) Operations management is the systematic design, direction and control of processes that
transform inputs into goods and services for internal and external customers.

SOLUTION 6
(a) Advantages of bureaucracy include the following:
(i)

Specialization
In a bureaucratic organization, the duties of each post are clearly defined, and so are
the qualifications of the person required to fill it.

(ii)

Systems of Rules and Procedures

Activities in bureaucratic organizations are governed by the application of rules and
procedures, thus leaving no room for deviations.

(iii)

Employment
There is a great deal of certainty and security about working in a bureaucratic
organization, hence some level of job satisfaction leading to higher productivity.

(iv)

Hierarchy of Authority
There is precise hierarchy in the organization. Each manager has a clearly defined
authority over subordinates in a particular field.

(v)

Impersonality
Detached impersonality governs decision making and activities in the organization
and so there is the possibility of better decisions being made.

(vi)

Co-ordination
As a result of standardization of skills and clear definition of duties and
responsibilities, effective co-ordination is achieved in a bureaucratic organization.

SOLUTION 7
(a) The term discipline is used to describe the situation when organizational members behave
and conduct themselves in accordance with standards of behavior acceptable to the
organization rules, goals and objectives.
(b) Job evaluation is the process of analyzing and assessing the content of jobs in order to
place them in an acceptable rank order which can be used as a basis for a remuneration
system.

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SOLUTION: BUSINESS MANAGEMENT, MAY 2014
(c) Advantages of a job evaluation system includes the following:
(i)

Salary structure is based on a formal study of work content, and the reasons for salary
differentials between jobs has a rational basis which can be explained.

(ii)

Regular job evaluation ensures that the salary structure reflects current changes in
work content of jobs, and it is not outdated so that pay differentials remain fair.

(iii)

A job-evaluated salary structure can protect an employer from accusation that rates of
pay discriminate between different types of worker.

(iv)

Analysis of job content and worth are made available for use in recruitment and
selection, training and development, evaluations of new or revised posts, etc.

(v)

The salary structure is based on job content and not on the personal merit of the jobholder.

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